What is metered billing? How do you use it using Chargebee?

Usage-based billing is not a new concept, we use it to pay our electricity, water, and more recently our phone and internet charges. The normal practice is to charge a monthly minimum and charge the additional fee based on the usage. In other words, it is also called metered billing.

Let us take an example,

A website hosting company that charges its customers a monthly minimum and the additional charge is based on the number of GB that you use. With Chargebee you don’t have to worry about keeping track of which of your customer is getting billed when, you can just configure webhooks to remind you when to charge your customers.

To configure metered billing or usage-based subscription billing for your business with Chargebee:
Goto Settings > Site Info > enable Notify and wait to close invoices

And Update Site Info.

How exactly does it work?
When a customer need to be charged for the next billing cycle or when they have upgraded or downgraded their pricing plan. An invoice in created with the monthly minimum and is set to the pending state.

When the invoice is created, the webhooks are triggered, you will receive generated invoices via webhooks in your webhook handler, and after receiving the invoice, you can use the ID of the invoice resource to add the usage charges or non-recurring Add-ons to the invoice received.

The Non-Recurring Addon:
When it comes to pending invoices with Chargebee there is an option to “Add Addon item”. This calculates the Addon amount based on the quantity.

Then Chargebee calculates the total invoice amount for you. You charge the customer by closing the invoice or else the invoice will continue in the pending state.

Here is a short “How to” Video:

When some simple sophistication works wonders why would anyone want to go back to the Stone Age is a question sometimes we must ask ourselves. Methods implemented using usage-based billing or metered billing, what are your experiences? Do let us know.